Several forest management and conservation models exist throughout the world and Nepal is one of the pioneering countries to implement a community forestry programme. Studying the relationship between carbon stocks and biodiversity is important in understanding the trade-off between two major benefits of forest ecosystems, and working towards achieving the optimum balance between them. This study aims to: (i) estimate the biomass and total carbon stock in community forests, (ii) explore the relationship between carbon stocks and the diversity and density of trees, and (iii) examine that relationship in relation to the elevation of the community forest. The study covers all the components of forest carbon including above- and below-ground, and soil carbon. The biomass in the forest was found to be 299.20 tons/ha whereas the total carbon stock (including soil carbon) was found to be 162.95 tons/ha. Total carbon and biomass carbon were negatively related to the diversity and the density of trees. However, soil carbon was positively related to these factors. The results of the study can contribute to revising community forest management policies and helping to increase forest carbon and biodiversity.